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The alert component can be used to highlight certain parts of your page for higher content visibility.Episode #4: Demand Response Protocols & Trends, with Rolf Bienert of OpenADR
Episode Summary
In Episode 4, I speak to Rolf Bienert , the founding Managing Director of the OpenADR Alliance . OpenADR Alliance is the non-profit standard maker and certifying body for the biggest and most widely adopted open standard for “demand response” (DR) protocols that impact EV chargers, HVAC, and electric water heaters.
In this episode, Rolf and I spend the first half of the conversation getting a broader overview of what DR is and the present state of the industry in terms of its adoption by OEMs and utilities. We also discuss the consumer incentives which have driven DR out of HVAC appliances and into the thermostat while mostly keeping DR protocols entirely out of our water heaters.
Finally, we spend the last half of the interview talking about the new standard called EcoPort (aka CTA-2045) and recent legislation in Washington State, Oregon and California which will likely change the DR story for water heaters nationwide – giving a new boost to water heating DR programs that have languished in recent years.
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Key Links Discussed in the Podcast
Transcript
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[00:00:00] Nate: Hello and welcome to Heat Pump Review Podcast. I'm your host, Nate Westheimer. Heat Pump Review is a newsletter, podcast, and data resource for all things heat pumps. Our goal is to discuss heat pumps in a way that is accessible to people who are curious about the technology and how we can best develop and deploy this technology as the world transitions from inefficiently burning fossil fuels to efficiently heating and cooling our homes and businesses, heating our water, cooling our foods, and even greening our industrial processes with an ever improving energy grid.
[00:00:40] If you like today's content, check out our website at heatpump. review. Subscribe to our newsletter and check out our past episodes by subscribing to the podcast in your favorite podcast player.
[00:00:52] Today on the podcast, we're going to talk to Rolf Bienert.
[00:00:55] Rolf is the managing and technical director for the OpenADR Alliance, where he oversees all aspects of the nonprofit organization and has been on its board since the organization's inception in 2010. OpenADR was founded by industry stakeholders and stands for Open Automated Demand Response. For the uninitiated listener, demand response, also known as DR, is a term used to describe how electricity hungry appliances like refrigerators, EV chargers, water heaters, and of course HVAC systems, respond to signals from utilities and other entities on the electricity grid. Asking them to curtail or shift usage in order to keep the grid stable and prices low.
[00:01:40] The OpenADR Alliance is in charge of the OpenADR protocols, which make it easy and standard for these grid operators and appliances to communicate and the organization exists to help facilitate the ongoing development and adoption of these open protocols, ensure testing standards are high, and also make sure the industry is educated about them, especially as these standards become increasingly required in the most advanced energy markets.
[00:02:08] Today, Rolf and I will discuss the present state of demand response, And the adoption of demand response features generally, but especially with regard to water heater and HVAC systems. We will also discuss the EcoPort initiative, which as Rolf will explain in greater detail has helped standardize the technical implementation of another open standard called CTA 2045.
[00:02:33] So let's get into it. Rolf, welcome to Heat Pump Review.
[00:02:38] Rolf: Thanks, Nate, for having me. It's great to be here and great for this fantastic intro already.
Intro to OpenADR Alliance
[00:02:43] Nate: Great. Well, I hope I have done the OpenADR Alliance justice in the initial intro, but why don't you just quickly add anything to what I said about it and and also give people a bit of a sense of who you are and, and what you've worked on in the past.
[00:03:03] Rolf: Yeah, absolutely. And maybe we do this in a bit of a quick timeline here. You already mentioned demand response as, as a way to control, or I really don't want to say control, but manage these consumers of energy, but maybe to go back really to the original thought behind it. It was. An idea to avoid essentially excessive usage of energy really at the end of the day, there is a certain amount of generation that we have, of course, you know, from all sorts of resources from, you know, coal power plants to gas, to nuclear and so on and so forth.
[00:03:48] Right? I mean, Basically the aggregate of all generation out there. And then, and then you have the demand side that is using the energy. And what happened for instance, in the early two thousands in California was that due to some mismanagement and some, some other problems at certain times, the consumption just literally.
[00:04:11] You know, cut through the, the generation curve, if you want to say it that way. So you can literally imagine that that there was no power available at a certain point. And so they had to turn off whole towns, you know cities, part of the cities in the Silicon Valley, you know, of all places, right.
[00:04:30] Where you would think that that's you know, highly sophisticated there, but same, same grid as everywhere else, of course. And the idea was born to, in a more automated way, communicate from the utility to the user, to the demand side, to the product, if you will, that we need to adjust the consumption.
[00:04:57] Right? So really, as we called it at the time, you want to flatten the curve, right? If you imagine that the energy or consumption curve kind of going steeply up, right? Approaching the, the generation curve, you want to flat, flatten that peak so that you just simply had enough energy and you didn't have to to do what they had to early 2000s where it turned off cities, right?
[00:05:25] In this case, You would rather than send a signal that temporarily, say, set up your air conditioning temperature by two degrees or four degrees so a compressor turns off. If you do that often enough, with enough buildings, you save quite a bit of power at a certain time, right? Now. Over time, all of this developed into like a lot of other functionalities, of course, you know, and today we're going to talk more about water heaters, of course, and appliances, but just to touch on that, you know, you have electric vehicle charging, right?
[00:06:01] Huge topic, obviously a new huge consumer of energy, right? And it will only get worse on that. And then we have things that you know, are called virtual power plants, which are in a way, you know, just an aggregation of resources. So it can be as, as small as a house. A building, a residential building that has maybe solar, maybe a battery, maybe a car charger, and of course the water heater, the appliances and so on.
[00:06:32] So, so just really to manage within that entity, within that customer, a building, manage all these resources and consumers. That would be, you know, as the name suggests, like a virtual power plant in a smaller scale, right? Then of course you have like an Apple, Apple campus in the Silicon Valley, which is a virtual power plant.
[00:06:56] They have huge, you know, solar systems, batteries, and so on. So, and then one grid connection, which can be balanced that way. And so out of all of this, then the standard, as you mentioned, open ADR came about and.
Rolf's Background
[00:07:12] Rolf: I originally come from telecom. So if you quiz me on anything that needs cables that are like more than a millimeter thick, you know, that's usually too much for me.
[00:07:23] But I kind of came from the standards side of things wifi, Bluetooth, ZigBee, and so on in the early two thousands and, and then drifted into it is, space of managing energy devices, energy systems. And as you already mentioned in 2010, late 2010, the Alliance was formed and they wanted to do this a little bit different than some of the other groups before.
[00:07:53] And so they really wanted. You know, marketing administration and technical aspects to be managed. So they asked me to join them directly as the technical director at the time. to really guide the process of this standardization project. And we have then set up the testing and certification after we had the specs done, you know, working right now with 10 test houses globally to do the certification tests.
[00:08:23] And have by now a little more than 300 certified products out there and so on and so forth. So, you know, lots of, lots of these little details to be done and really these industry groups like the OpenADR Alliance as a nonprofit organization, really at the end of the day, you know, for those of your listeners that have never really been, you know, looking at something like this.
[00:08:48] It's essentially a small company, right? You have to have administrative stuff. You have to have marketing, you have to have the technical side, and you just, instead of making a product, you're, you're managing the standard and helping your members really opening these markets. So our members get obviously OpenADR certified.
[00:09:10] So we want to make sure that with their OpenADR certification, they can They can go places,
OpenADR Adoption, Inertia & Proprietary Standards
[00:09:16]
[00:09:20] Nate: Well, it makes sense for there to be standards and people talk about the electricity grid being the largest quote unquote machine in the world. It is something that is You can walk into any home that is powered by any utility, and in the United States, it's going to be AC power, it's going to be at 60 hertz, and so if it's the smartest machine in the world, or the largest machine in the world, it makes sense that we need more and increasing standards and open standards to exist. So that it runs smoothly and, and so that it advances to meet the growing demands for electricity. As you mentioned, when these things are well coordinated, instead of turning off whole towns, you can turn off the number of appliances that equal to whole towns, but still keep everyone's towns mostly online with electricity.
[00:10:16] One thing I'm curious about is just, I don't want to say competition, but when. With regard to a standard for interacting. Around demand response signals having appliances that, that do that. What are the main things that you're up against in terms of what OEMs are implementing on their devices? Is it, I'm sure category one is just doing nothing or inertia but, but what is category two, what are the other things out there or is open ADR the really the only protocol in the game.
[00:11:00] Rolf: actually, that's a very good question. Of course. And, you know, I certainly cannot claim that we are as prominent as let's say, Bluetooth for your for your headset and, and things like that. But really I would say number one, or, you know, you said you said complacency basically is number one. Yes.
[00:11:19] But you know, the, the biggest competitor for us, in fact. Is still the proprietary standard, you know, and over the years, I think the last 20 years in the whole industry, whether this is, you know, telecom or, you know, anything, communication or technology has really transformed that people are not.
[00:11:40] Just doing their own thing anymore. I mean I don't want to, you know, necessarily mention them, but we know there are still a few big big companies that like to have their own connectors and things like that. But slowly, but surely, even those are phasing out, right? The latest generation of phones now all have USB C and things like that.
[00:12:01] Right. So, so it is converging to the standard, but nonetheless, it's still. Of course, very enticing for companies to go out and say, Hey, just buy our solution as it is, right? We offer you the whole nine yards and, you know, both sides of the communication pathway and it will work. It's guaranteed, right?
[00:12:26] Because it's our product. It would be bad. It would be bad if that wouldn't work, right? Downside, of course, is that it's not scalable. Right. So now, now somebody that buys that is just like, if you imagine you buy a headset, you know, that's not Bluetooth, but something that has some kind of a dongle that goes in your phone or so doesn't work with anything else.
[00:12:48] Well, you're kind of stuck with that, right? You, you cannot, you cannot really exchange that. It's not going to work in your car or whatever. So having that standard really you know, helps diversify that and you have much more choice, but not only that, I mean, this is certainly, it's certainly nice to have choice and to be able to use other manufacturers and especially also if one goes out of business, right?
[00:13:15] I mean, if, what, what, if one goes out of business you're kind of stuck, right? You have nothing to replace you know, broken parts anymore, but, but also. Really as far as cost of implementation is concerned, right? This is all much faster if a utility has to integrate over and over and over with, with, with downstream systems, you know, they would be on that all day at the same, the same token, if the manufacturer needs to, you know, build a new interface for every utility same thing, right?
[00:13:48] They're just developing, developing, developing, you know, having. Kind of tweak tweaks on the same on the same system. So anyhow but back to your really to your question So that is really where we still see the biggest competition
[00:14:02] and Other than that, you know, it really is not You know another standard that does the exact same thing.
[00:14:11] So there are maybe some control and command standards as I like to call them. They come out of the utility space as, as you can imagine. I mean, you mentioned the grid is the, like a huge machine, right? A very important machine. So of course there is. You know, thousands, you know, if not, you know, another magnitude higher of, of control mechanisms in the grid, right?
[00:14:38] I mean, I mean, usually you are a consumer and maybe many of your listeners are just consumers of energy and you say, Oh, I got a meter and I get the power, right? Easy enough, but, but of course you have no substation somewhere. They have to be controlled, right? Frequencies have to be stabilized. Things like that, you know, just, just to give you an idea, the biggest problem on wind power, you know, with all these windmills.
[00:15:08] It's not, you know, the building, it's not everything is actually syncing the frequency,
[00:15:13] you know, it's a simple thing, right, you know,
[00:15:16] syncing the frequency of these, of these wind generators anyways. So, so there are control standards in place in the, in, in the the grid itself. And, you know, sometimes we hear folks saying, Oh, let's just extend these down to the customer.
[00:15:34] And, you know, sure, that works to some extent. But that's really more of, okay, I want to turn off your, your system, turn off your meter and such, whereas open ADR, we really don't want to Turn anything off on your end, right? We want to give the customer system information so that they can do informed decisions, right?
[00:15:57] If the price changes, right? We want to communicate different prices. If energy needs change up or down, right? Could be these days, it could be up or down regulation. Yeah. Hey, can you use more energy right now? You know, Hey,
[00:16:13] Nate: You have A battery and you have an
[00:16:16] Rolf: pre, pre pre heat your your hot water, right? I mean, to get us back to the topic, I
[00:16:23] Nate: Yeah, yeah,
[00:16:24] Rolf: here is like a thing where if you know that today at 2 PM, the price, your price goes up, right?
[00:16:33] It would be ideal if you're a water heater in the morning, you know, maybe after the morning showers or whatever. You know, starts to heat to its maximum allowable safe
[00:16:45] temperature so that then maybe at 2 p. m. you can just leave it off for for a few hours without without the customer ever really noticing it
[00:16:54] Nate: right So you need a much more sophisticated set of signals than just turn on, turn off, which is maybe what the utilities do. And the ISOs, the, the larger grid operators are most used to. Just real quick, before we move on to the next set of topics on this question of proprietary systems, I am curious, first of all, I'm very sensitive to the desire to do that. I've spent a career in software and there's always the open source solution that you're a little bit. wary of Because what if we don't have full control over what we do? And then you go and you own this, this thing that you have to maintain forever. It's an, it's, it's a classic paradigm in software development. But in this case, I'm curious, are there market reasons why people are doing this as well? Is it, let's just take OEM ABC or they are, are they doing this only for those classic software reasons? Where maybe the engineers and the product managers want to use their own standard, or are they also doing it to reserve the right to be an aggregator themselves?
[00:18:05] Do they think that if they go open, then. Anybody can be the market interface between the customer and the utilities versus if they go proprietary, is there a part of them that is hoping, Hey, maybe one day we'll be our own aggregator virtual power plant.
[00:18:27] Rolf: You know, I, I think you, you really touched on two excellent points here and it's probably both of it. I mean, if we, you know, when I only briefly touch on, on the, on the former point, absolutely. You know, you have folks, you know, that they're supposed to develop something, you know, to connect. They might even know of the standard.
[00:18:50] They might even take the standard, right. And give it to their developer and a developer thinks, Oh yeah, this is, this is cool and all I tweak this, I tweak that, I tweak this. Right. So, so now it works even better for me. And, and not even, not even thinking about. Oh, now I'm not complying. Right. It was just, it just fit better, you know, and I don't blame, you know, developers for that.
[00:19:14] And and so they're selling that, you know, so we actually know of actually a number of companies that, that sell their own kind of APIs and we know they're like, 85 percent open ADR and
[00:19:26] the rest just you know, variation. But, but yeah, no, you're, you're absolutely right though on the, on the second point.
[00:19:32] And that is certainly, certainly true that you know, whether it's. Kind of just regular business development or marketing or or whatever we want to call it, there's certainly this aspect, right. That you might have a big aggregator just really don't want to, or that doesn't want to, you know, get anybody else in, right.
[00:19:55] They might have their customers connected, their resources connected. They might offer a very specific. Service, like let's say a management interface, right? They might give a customer a like a way of basically managing their entire house, you know, including their charger, as we said already before, right, including their charger, their solar, their battery, et cetera, et cetera.
[00:20:19] And the water heater and so on. And they, they want to provide this, this interface to the customer. But they want to be the. You know, interface for building management really, right? So, and they, of course, then, you know, can go to a utility and say, Hey, you know, I got, I got, you know, 100, 000 people in your territory on my, on my interface, you know, Hey, here, I can integrate that with you, you know, here's our API.
[00:20:53] And you know, on the utility might say, Hey, you know what? This might be worth it for us because it's, it becomes all of a sudden a big, you know, aggregation point, you know, where we're not talking about like an individual house with like maybe five, six kilowatts up and down. But now we're talking about a company that has all of a sudden, you know, it has like, you know, a gigawatt in that territory
State of Demand Response | State of the Market
[00:21:19] Nate: Well, this is a good point maybe to turn to a broader state of the market conversation. So to that kind of question of aggregators and third, whether they're third party or it's just the utility themselves. That is interfacing with these smarter appliances. You know, how do you think about it?
[00:21:48] Obviously there's also other ways to cut it. There's residential, there's commercial, there's industrial. I assume, and just looking at the open ADR website, that there are implementations that span across all sorts of different types of appliances and therefore customers. So where are we today in terms of demand response protocols, mostly open ADR and proprietary protocols being integrated into the major appliances that are being, being sold today. And, and, and I guess, where do you see it going?
[00:22:26] Rolf: Yeah. So I mean, really you know, not, not an easy question. Let's just say like this, you know, but so maybe to really start, we have to probably go back a little bit or, you know, Maybe I should preamble that by saying that as far as I know, and I'm not a manufacturer of appliances, right, but as far as I am always told, margins on appliances are very low.
[00:22:58] Nate: Right,
[00:23:00] Rolf: because there is big competition, right? As soon as you have a consumer product that sits, let's say, on the shelf at Home Depot, right? If, if there is a product with the same features and no, no particular, you know, cool feature or anything that, that stands out to the customer. The customer will likely buy the cheaper one,
[00:23:23] right,
[00:23:23] I mean, why, why wouldn't they, you know, if it's the same quality, same energy consumption, yada yada they buy the cheaper water heater, you know? So, so there are under, you know, high pressure to, to really like tweak those prices as, as low as possible. I think in fact, funny enough, right? Since we're talking about it, it seems like heat pump water heaters actually have kind of, Cut through this a little bit, you know, I see quite some high prices, you know, on, on those versus more conventional water heaters.
[00:23:55] So there's, there's quite a jump in there, but anyway, anyway, so I think, I think it's really important to keep that in mind because from there on, you know, we understand a little better where the appliance guys are coming from, you know, so we have talked to appliance manufacturers and whether this is water heaters or, you know, air conditioning systems or whatever it is.
[00:24:18] For almost 20 years, right? About this. And they always hesitated jumping on any of these bandwagons, right? If you want to call it like that, because for them, it's of course, an additional cost. To add any kind of interface there.
[00:24:40] Nate: right.
[00:24:40] Rolf: And, and I mean,
[00:24:42] Nate: And not just, not just, the, on the bill of materials, but, but also on customer support, also on training their workforces. It's, it's non trivial to add a piece of connected equipment to something that was
[00:24:55] Rolf: exactly. It's non trivial, absolutely. And, you know, if you, if you think about your water here that you probably have or had at least, you know, 10 years ago, Hey, you put that somewhere in the corner and a garage and you never touch it, right? I mean, that's, that's the goal, right. For that,
[00:25:13] Nate: Yeah. This is a public service announcement that you should once a year touch it by
[00:25:18] by draining it. But, but correct. Most, most don't. And even I skip a year or two.
[00:25:23] Rolf: yeah, exactly. Exactly. So, so they were always very hesitant to put anything in because they also said, well you know, if we put this in, how do we make the money back? Right. I mean, it must be either something that's a really cool feature for the customer then, right. Where we can say, Hey, Customer, if you buy this thing, it has this interface.
[00:25:46] This may be demand response interface, maybe open ADR, maybe something else doesn't matter and you get what for it, right? So, so, so far there was not really a whole lot thermostats. I mean, thermostats are a good example where this actually changed. 10, 12 years ago, right?
[00:26:10] Nate: Nest.
[00:26:11] Rolf: what, what's nest, you know, no commercials here, but I'm, I'm the first to, to accept that they were the first ones pretty much that did that commercially, right.
[00:26:22] And to maybe briefly explain that, since you mentioned them, so nest of course has, All the intelligence in the cloud, right? And then have their proprietary connections to all the thermostats. But like so many things these days, right? From, from Google to Facebook to everything, everything is data driven, right?
[00:26:45] So, so Nest knows, right? They, they know, they know where you are. They know when you get up in the morning, right? Because, you know, thermostat set for, for this or it's self learning, right? You know? Self learning is just another way of sort of like storing how you live basically in your system, but it's, it's, it's in a positive way from, from, from my perspective.
[00:27:11] So they know what you're doing. So, and they have, you know, all these thermostats now, they all of a sudden thought, Hmm, there is a whole new business model for me, right? Where before I was like this, Customer focused thing. It's a cool app, you know, and it can, they can do all of this, but, but now, Hey, I have access to these thermostats, right?
[00:27:36] So they went to the utilities. And said, Hey, I have in your territory, I have say, I don't know, 10, 000, 100, 000, whatever, you know, thermostats. So I can kind of make adjustments to these HVAC systems based on demand response events, right? You don't have to worry about it. I give you. Like a service level agreement that, you know, there's, I don't know these contracts, so don't, don't quote me on them, but I'm, I'm assuming that they have a certain service level agreement that, you know, X percent of thermostats always online and yada, yada, yada.
[00:28:16] And if then the utility needs in that area. Either, you know, in this case, most likely power back. So the typical demand response curtailment event, they can basically just tell Nest, Hey, in the zip code, you know, or, or, you know, Nate's house or Rolf's house, it doesn't matter really you know, how, how granular you want to make it Hey, can you, can you do a moderate.
[00:28:42] Energy
[00:28:43] saving, right? So like turn up the air conditioning two degrees, right? So, so these new business models came out and not yet so much for a lot of the other appliances.
[00:28:55] Nate: right. Well, I think you're speaking to, you know, this thing, which is there has to be something in it for the consumer and thermostats started with it's the comfort, not the economics. It's we've had such a longstanding comfort issue when it comes to heating and cooling our homes, that they came out with a painkiller, this thing promised to be smarter and therefore keep you more comfortable where some of these Other things that can do demand response aren't necessarily speaking to your comfort level.
[00:29:28] They're only speaking to a potential economic benefit and or for even a small group of people. A benefit to the climate or, or to conservation of, of electricity. And so maybe the question should be better flipped instead of what is the state of adoption of these, of these protocols, you know, what is the state of enforcement or market mechanisms to even take advantage of these?
[00:29:58] Because if, for instance, I have a, I live in Maryland, I have BGE, which is an Exelon company as my utility And they may care deeply about HVAC systems, and so they'll interface with Ecobee or Nest. They will also have a pager right on my compressor to shut it off if they feel the
[00:30:22] need.
[00:30:23] Rolf: Still one of those.
[00:30:24] Nate: but if I have an elect electrified water heater, whether it's heat pump or resistance, they don't care.
[00:30:32] They have no present program in my area, in my service area around water heater. So where are you seeing. Things going in terms of utilities caring even about this and, and maybe that also speaks to if the utilities don't care, maybe this is where aggregators and OEMs who are aggregators themselves or want to be aggregators themselves could, could play a role.
[00:31:02] Rolf: Yeah. And we have started seeing that now a few years ago. And I mean, I was doing sort of like during the COVID years and not sure if COVID slowed this down significantly. In fact you know, interestingly in, in, in this space, you know, whether we talk or water heaters or EV chargers, it, it. did not seem that COVID slowed down a lot of the development, which was good to see.
[00:31:30] But more specifically we have seen that in the Pacific Northwest a lot. And I think the reason was that over the last sort of 10 years, or maybe five to 10 years we have seen a big kind of switch there from the typical gas storage, water heater to the heat pump storage water heater. And all of a sudden you have this shift right from, from natural gas, which was probably just fine to additional electricity consumption.
[00:32:06] Right. And all of a sudden utilities like Portland General Electric PGE up there realized, oops, you know, we have, we have a problem there, right? You know, early evening and then now we add chargers and everything. So we are running into problems. So, so those were the areas and the utilities basically in, in Oregon and Washington state that started with this.
[00:32:32] So they have been working on this for actually several years. And there is now regulation in place in both of these states that essentially new heat pump water heaters need to have a grid interface. So we can talk about how that should look like in a little bit. But generally, I guess we can say that these water heaters have to have now a grid interface.
[00:33:01] So that's a good start. You know, where what we are still You know, lacking this, this is all still very new, you know, and we know the utilities don't necessarily move at, you know, light speed, right. And I'm don't blame them for that. It's critical infrastructure, right? You don't just mess with that. You know from, from one update to the next would be a little tricky, you know, if that update fails or something.
[00:33:26] So, so again, I don't necessarily blame them, but it takes some time, but so we are all. Still waiting for more of these programs to actually come online to make it then worthwhile. For, for the water heater manufacturers to, to really put in all of these features, but, but we do see a number of certified products on that end.
[00:33:50] Both with you mentioned earlier, the EcoPod CTA 2045, which we might touch on later the place, or for instance, having open ADR in a cloud controller, as, as we already discussed for like Nest because a lot of these newer heat pump water heaters I think they have a little bit of headroom in their, in their cost, you know, because there are obviously quite a bit more expensive and a lot of them have already wifi,
[00:34:18] you know, so they have a, they have a wifi interface. So with that, of course they can. Connect to a web services system and then it's fairly easy for them to basically receive open ADI in the cloud and then locally
[00:34:33] Nate: Well, and, and whether it's through the legislative process or through public service commissions, certainly we have needed in the past these markets, whether it's at getting economic value back to the customer or other types of value that would drive adoption of these technologies Government and and these public service commissions can help set these standards and make sure that there are these interfaces and they are there and my guess is, is that as we see, renewables go up and you mentioned earlier how, for instance, a hot water tank can be used almost like a battery and that it can Absorb energy and use energy at times when there's peak generation. Hopefully, you know, more public service commissions and, and state legislatures also have this adoption.
More Economic Headroom
[00:35:24] Nate: You mentioned these heat pump water heaters being more expensive, having more headroom. I'm wondering if you have a perspective on that being an overall trend as more of the cost is going into the upfront CapEx versus the OpEx of heating and cooling loads. If you buy a piece of equipment like a heat pump, water heater, yeah, it might be a little bit more expensive upfront, but that's because you're going to save so much money in the long run of owning the appliance due to its efficiency gains. So are you hearing this at all from OEMs, is this a general direction where maybe there's going to be a little bit of a flip in terms of upfront costs and will that help drive adoption of this as well?
[00:36:14] Rolf: Yeah, I, I think so. I mean, I cannot claim that I specifically talked to the OEMs about, about that you know, directly, but I think we, we see a lot of that right in, in the whole, in the whole space, you know, you see it with electric vehicles, right? I mean, same, same thing, right? You see it with, with these water heaters.
[00:36:34] I mean, I'm thinking about Basically throwing out my perfectly fine water heater to get, to, to, to pay 2000 you know, to, to get a, a, a nice heat, connectable heat pump, water heater which I'm not sure if I get, you know, will they get that back eventually, but that's a different
[00:36:50] Nate: Well, while I can send you and I'll link it up in the show notes here, we did the math at least in terms of Maryland gas and electric rates. And I also have a two year old conventional water tank and it absolutely pays back in only a couple of years . It's, it's it's a really great thing. So we hope you buy
[00:37:07] Rolf: it makes sense actually, you know, and just to, to mention that I also have solar, so you know, if my electric one comes on with like three kilowatts, you know, I'm eventually going over my solar. So if I can, if I could cap that as like, I'd like a 500 watt, 800 watt, right. You know,
[00:37:25] Nate: The payback is even faster.
[00:37:27] Rolf: Yeah,
[00:37:28] but, but but anyhow, no, I think, I think I mean, you hit the nail on the head there.
[00:37:32] We are seeing a lot of you know, tendencies like that in everything, right? Again, from electric vehicles to, to heat pump, water heaters, even heating systems, right? I mean, if you look at okay, like a floor heating system, yes, might be, you know, a little more difficult to install, might be more expensive in the beginning, but it's So much nicer.
[00:37:55] It's, it's so much easier and, and and smoother and cheaper in the long run. Right. So where, where I see, and, you know, this might, might become a little philosophical to some extent, but, but also real is where I see the issue with that is, you know, low income versus, versus higher income folks, right.
[00:38:18] Because, you know, a lot of these things, and that's, it's. It's always been a critical component here that, you know, we have incentives for, you know, buying a nice appliance, right? You, you, you buy a energy star appliance, maybe now, or, you know, grid controllable, heat pump water heater and you get a cool incentive from the utility.
[00:38:42] But that all goes to like, you know, middle class and up.
[00:38:46] Right.
[00:38:46] Because, you know, people in the lower middle class or even below they have no money to, to, to buy that. Right. I mean, they will need to buy for the time being the conventional water heater for, you know, 350. I'm not sure how they that cheap still, but where's the, you know, 1, 500, 2, 500
[00:39:05] Nate: Right.
[00:39:06] Rolf: water heater that, Hey, as a cool app with it.
[00:39:09] Right. So
[00:39:10] that's And so we need to, I think, think about that, right? It's an aspect, I mean, not something that we are necessarily working on specifically, but it is something that I think we all need to keep in mind, right? We need to make this accessible for, for everybody really that, that, that we want to participate here and, and make it, make it really, really reasonable for them as well.
[00:39:40] Right.
[00:39:40] Nate: Well, I'd like to get on to the Ecoport and CTA 2045, but that's such a good point and it's a good segue to to another episode that we'll be releasing either before or after yours, which is about the incentive and about the loan financing. Landscape for these exact reasons, and I
[00:39:59] think it just speaks to the importance of broadening demand response because if all of a sudden the economic benefits of having a smarter appliance can be tied back to, let's say, the financing of it as as a way to help pay back that loan. Then we can perhaps move into this energy transition more equitably and, and make sure that the best appliances are getting to, to everybody.
Ecoport - CTA 2045
[00:40:25] Nate: So yeah, let's talk about this. You mentioned it quickly where there's this other thing called ecoport. So, and, and that's the, and that is along the lines of the standard CTA 2045, which you mentioned as well. Is now being mandated in the Pacific Northwest and California. So Washington state, Oregon, California, all new water heaters, you mentioned will be required to have this standard. So what is Eco port? How does it relate to open ADR? How is it different from open ADR?
[00:41:02] Maybe we'd start there.
[00:41:03] Rolf: Yeah. No, that sounds, that sounds great. And I think really just kind of, you know, if we, if we remember what we discussed like fairly, you know, far in the beginning about the cost, right. The cost factor, you know, margins and so on. And, and so that the, one of the biggest problem for, for any appliance manufacturer is really that they cannot customize models for, for every state, for every zip code, you know, for every fricking utility, if I can say it like that that, that, that would completely blow their profit, you know up.
[00:41:45] And that doesn't really make any sense, right? So the key is, and that's why we really have standards in a sense is that, okay, you, you build one, one water heater maybe a lot of models, but, but technically one, one type of water heater there, and you can sell that everywhere in the U S and maybe even with small modifications, maybe even internationally and stuff like that.
[00:42:07] Right. So what, what therefore cannot really happen or should not happen is that, Oh, this state wants to stand out, you know, the other state wants that standard and so on, and then the manufacturer is stuck, right. And then for the longest time, as I mentioned. early on, the, the appliance guys were sort of like very, very careful, you know, they didn't want to put in Wi Fi or Bluetooth or ZigBee because they just said, I don't know what's gonna, what's gonna win, win in, in, you know, quotation marks here.
[00:42:41] But, Now with CTA 2045, it's a little different. So what that is, is a, what we call it a modular communications interface. So kind of a fancy name here, but so if you, if you really want to, and I want to caveat that right away by saying, it's not exactly the comparable, but for in layman term, you could argue that It's kind of a USB port for appliances, right?
[00:43:14] So the idea at least is the same. The execution is much different, but you know, USB port on your computer obviously is a, a modular interface. You can plug in a lot of different things and they will all work, right? Because, you know, in the computer, you have different drivers and stuff like that, that, but.
[00:43:35] Do different things, you know, whether this is an external hard drive or, or, or an IP phone. Anyhow, so CTA 2045 is a physical interface. It's literally a plug. It's a, it's a, a, especially on like a water heater, we designed a bigger, bigger form factor of this thing. And so it's a, it's a little box. I.
[00:44:01] I'm a non smoker, but I think it's about the size of a pack of cigarettes is that module that can plug in the water heater. It's a very secure connection. It's a plug that comes out of originally the original ideas of this plug come out of the automotive industry. So it kind of snaps in and really sits tight and so on.
[00:44:21] And on the applying side or over this interface, I should say. There is only like a small set of commands that is being sent back and forth. So there's nothing like crazy fancy. It's a simple exchange, electrical connection here, nothing, nothing wireless in that plug, right? It's a simple connection Like on and off, like you can
[00:44:47] Nate: run, you can't
[00:44:48] Rolf: way, in a way on and off, right?
[00:44:50] Of course, of course, you know, we have. a little bit more like, you know, Hey, are you alive? Right. Kind of a status. And, and, and, and in fact, we talked about it before, right. We have a pre heat. Kind of thing, you know, so, so a few functions, but still very
[00:45:03] Nate: simple. Very very simple.
[00:45:05] Rolf: Right. And you can have in the appliance, you can literally have like a little like I don't know which seven or whatever processor. So it's almost a matter of, of cents to a few dollars
[00:45:19] to put that interface
[00:45:20] in. So
[00:45:20] I'm
[00:45:20] Nate: the types of, these are the types of chips they'd have on the device anyway. These are the operations they're doing any,
[00:45:26] anyway.
[00:45:27] Rolf: Yeah. Like they have something like that anyways, exactly. And, and this interface is in this case, in that bigger form factor, as I mentioned, even has, even runs on AC voltage so that, you know, if, if the, if the water heater is dumb otherwise and has nothing else, right. At least they just put in the AC voltage and then maybe connected to some relays that, you know, the, the, the thermostat that it has or something and turns it on off,
[00:45:53] right.
[00:45:54] And then in that module now. that sits on the outside. So there can be a number of things, right? It could have, or most likely will have, a Wi Fi connection, right? So it connects to your router. But In that module, that could also be like open, an open ADR and point in there, right? You know, or it could be some proprietary that then goes to the water heater cloud,
[00:46:19] you know, and then back to some something or some other cloud that has done maybe open ADR in, in that spot there.
[00:46:28] So that's really then the connection here. So you get the open ADR signal
[00:46:33] Nate: it.
[00:46:34] Rolf: And we should maybe actually mention so typical signal types in OpenADR are either like curtailment levels like plus minus, you
[00:46:44] know, hey, can you, can you temporarily use a little less or You know, if you're talking about industrial resources where it could say, Hey, can you use exactly like a hundred kilowatts less or whatever, whatever is in the contract or you have prices, right?
[00:46:59] So both, both is possible with, with a lot of variations in between.
[00:47:04] Nate: Right. Right.
[00:47:05] Rolf: So that signal, let's say comes from, from the utility to some. Control point. Let's just call it like this. You know, whether this is the gateway, whether this is the actual module or whether this is in the cloud, this is relevant. And then that plug really then just does the final setting in the, in the water heater, right?
[00:47:29] Nate: Right.
[00:47:30] Rolf: You know, preheat now or heat up, you know, the water heater might not even know what's going to happen later, right? So the module converts the OpenADR signal saying, hey, at two o'clock, it's gonna get more expensive, right? So the module converts that into a, hey, preheat now. And at two o'clock, it says, Stock turnoff, right?
[00:47:53] So
[00:47:53] Nate: to be clear, these, these sort of low level, I don't want to call them dumb, but let's just call them a basic or the, the, the minimum viable signals that that specifically that CTA 2045 protocol, that, that interface in between. So this is, this is super interesting and now I'm understanding it a lot better.
[00:48:13] And my guess is it, what you're finding is that this is just solving a lot of the problems you called out before, because now the manufacturer isn't necessarily in the business of, of even owning a bunch of complex logic and a bunch of connectivity and the customer support that goes along with that.
[00:48:33] And the technician doesn't even have to. necessarily install it. So when, when we're saying that CTA 2045 is being required in these various states, just, this is, might be a little bit of a nuance, but they're not necessarily required to be sold with that communication module plugged into it, they're just needing to be sold ready for that.
[00:48:58] Rolf: you're absolutely right. You know, I think it sounds like you, you have the right idea here. No, and that, that's the idea, you know, like you said, so there's really very little cost added, you know,
[00:49:09] Nate: to the
[00:49:10] manufacturer. Yeah.
[00:49:12] Rolf: And it could even be then that for instance, the utility might even.
[00:49:17] You know, buy a bunch of these modules, right? And like the incentive from the utility to you, for you to, to buy a heat pump, water heater says, Hey, you're going to get one of those modules, right? You know, we
[00:49:30] Nate: that is much more elegant than, than I initially appreciated. And, and it, then exactly what you're just saying, it allows for any number of engagement models. I could myself start a new aggregator and buy a bunch of these and convince a bunch of consumers to plug this in, in those states where I know they'll have. this port and I could go to the utility myself and try to, you know, sell them a million households or
[00:50:00] the public service commission could force the utility to do it. There's just now there's a bunch of different, it sounds like engagement models and the OEMs don't have to be hip to, to all of them.
[00:50:13] Rolf: And that, and that's really for me, the, the, the, you know, in a way that the challenging part, but also the beauty of, of all of this, right. As new this, this whole new, you know, in Japan, they call it a few years ago, the prosumer, right. Because, you know, the consumer is not, not just only the. The, the, the, the, you know, the, the, the sink, the electricity sink anymore, but they can actively participate.
[00:50:39] And then you have everything in between, right? You have, like you say, you know, you have maybe an aggregation point in between, or, you know, the consumer can play around with their car battery and, you know, the good stuff.
[00:50:51] Nate: It could even be the solar, solar inverters could have built in their own module that you could, you know, connect my solar edge inverter for my rooftop solar and connect it over to my my water heater and, and, and my water heater doesn't have to be solar smart. It just has to have eco port on it and and then. And then it can be, you know, tied in.
[00:51:18] Rolf: exactly, you know, and I mean, we, we might be, you know, I know that, you know, we, we all tend to be pessimistic, right. And say, Oh, you know, there's so many obstacles to this and that, and this and that, but, you know, we, we have already come a long way, you know, with, with all of this and regulations would certainly adjust.
[00:51:39] Nate: right.
[00:51:40] Rolf: You know, they have to, and I mean, I'm, I'm probably aging myself here. I guess your, your listeners can't see my gray hair. So, but you know, when I started at the German telecom operator, the killer app was a fax machine,
[00:51:56] right? So that was. you know, when this came out, you know, it was like 85, 86, 87, you know, everybody thought, I mean, Holy smokes, this is like the future.
[00:52:10] Right. And then, Hey, 20 years later, right. I mean, everything kind of exploded, you know, in the telecom space. And of course energy might not be quite as, as, as sexy as, communication, but, but still, you know, there's, there's so, so much to be you know, played with and explored.
[00:52:31] Nate: Yeah, well, I think the 21st century energy is gonna be as sexy as telecommunication was in the 20th, 20th century.
[00:52:40] Rolf: is, it is certainly, you know, and maybe, maybe then I'll shut up, but I mean, it's certainly, The key for a lot of other aspects of progress,
[00:52:55] right,
[00:52:56] If you look at progress in particular today, energy, having enough energy, you know, whether this is for blockchain stuff or, you know, for EVs or for whatever, right?
[00:53:11] It will enable, like, extreme progress. So I'm really kind of curious about that in the future.
Closing Thoughts
[00:53:19] Nate: well, just to, to close out and, and, On that question of the future, having California require this Oregon, Washington state, I know here in Maryland, if Washington, if, if those states have done it, it means that we'll inevitably get those same standards. It's, it's what's happened in cars and it's, it's what's happened with net metering historically and other types of innovations.
[00:53:48] But what would you like to Leave listeners with in terms of Actions they could take whether it's actions as a consumer or actions as an advocate to their regulators and to their elected officials what is your call to action?
[00:54:03] Rolf: I think really at the end of the day, the, the, the, the buck stops at the utility. I mean, the utility needs to, you know, needs to want to create these programs. Right. And I mean, we have certainly states where, you know, I, I, I worked with like like, let's say a, a, a central US state before that, you know, the, the guy was desperate, the utility guy was desperate to do a, a demand response program.
[00:54:34] But the energy cost was like fricking 8 cents, 24 seven.
[00:54:39] So there's zero incentive for a customer to participate. Right. But this is not going to go forever, right? That the energy cost goes up. And I think it's important for. The customers to understand that, as we know, everything always gets expensive, but by, by integrating all of this, you know, if it's heat pumps, if it's car chargers and so on, you know, we should be able to, to balance everything out much, much better and take good advantage of the renewables, you know and, and, and, Bring really everything together and in the long run, so that's going to keep their cost down, right?
[00:55:25] Because oftentimes, you know, and it's, and it's, it's reasonable for the consumer to say, Oh, I just, there's more renewables, but I see my, my rates going up.
[00:55:36] know, I have more green energy. Why? Why is that right? And it's an integration issue, right? It's integration issue that, you know, yes, there's, there's more renewables, but it's maybe there at different times, right?
[00:55:51] Where you are, you can't really use it or it's not really being used right. Right. And the more of this integration we have. The more effective this is going to get, and the renewables will not cost any more, even less in the long run, right? So, so really, that's kind of like the, the, the kick off here for the customer to think along those lines.
[00:56:17] And that we, you know, if we want electrification in transportation and so on, we really have to rethink a lot of these things. And, and yes, maybe that means. Some things might not be quite as we are used to, but at the end of the day, that's progress, right?
[00:56:35] Nate: Yeah. Well, that's great And I hope that people working on the utility side are listening to this now or in the future and and hopefully this conversation has helped them think about the need for integration. And my call to action to consumers, though, is to go onto the OpenADR website. I'll link to it in the show notes as well.
[00:56:58] You can see a list of products that have integrated both with Ecoport and brought more broadly with OpenADR's protocols. And on the Heat Pump Review website, you can also filter models that have done that integration as well, since that's a data field that's included in all Energy Star certifications.
[00:57:19] So use your power of your purse and, and reward the companies that are embracing this, this change. So thanks, Rolf. Really appreciate you coming on the podcast and having this discussion. I feel like we could have talked a lot more, but we'll leave it there.
[00:57:36] Rolf: Hey, that was great fun. Thanks for having me, Nate.
Outtro
[00:57:38] Nate: This has been a production of Heat Pump Review. The show was edited by me, Nate Westheimer. Theme music is by AlisiaBeats . To support the podcast, please rate and review the show on Apple Podcasts , Spotify, or wherever you listen to the program. If you think someone would enjoy the podcast, please share a link to them as well.
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